A disastrous start to the week for the US market, as some poor corporate results, weak US economic data and the unwinding of the yen carry trade conspired to drag stocks lower, was gradually wiped out as the week went on.
Helped by lower-than-expected jobless claims on Wednesday, Wall Street regained its equilibrium with the major indices only showing limited damage by close on Thursday night.
Among the big winners was ride-hailing outfit Uber Technologies (UBER:NYSE) as its second-quarter earnings and revenue came in significantly ahead of expectations.
Cybersecurity firm Fortinet (FTNT) was also in demand as its own second-quarter numbers came in higher than anticipated and it raised guidance for 2024 as a whole.
On the flipside, Warner Bros Discovery (WBD:NYSE) saw investors switch off as it wrote down the value of its cable TV assets by $9.1 billion. The company cited the continuing decline in audiences and subscribers to its linear TV networks.
KELLANOVA
Family-owned food giant Mars remains hungry for deals and reports that Kellanova (K:NYSE) might be the next acquisition on the menu sent shares in the snacks, noodles and cereals maker 21.4% higher to $73 this week.
Unconfirmed by Kellanova or Skittles-to-Snickers owner Mars, the potential transaction would allow the latter to diversify through expanding into the snacks business, although the mega-deal would likely attract the attentions of competition regulators.
If the deal with Mars doesn’t go through, Pringles-to-Pop-Tarts maker Kellanova, which was spun out from Corn Flakes maker WK Kellogg (KLG:NYSE) last year, could draw interest from the likes of Mondelez (MDLZ), PepsiCo (PEP:NASDAQ) or even Hershey (HSY:NYSE).
SUPER MICRO COMPUTER
It was always going to be a tough ask to impress investors being spooked by US recession fears and global bear market talk but missing quarterly expectations doesn’t help. Super Micro Computer (SMCI:NASDAQ) has been one of the big AI (artificial intelligence) winners this year – it was the best performing S&P 500 stock late July – thanks to its liquid super cooled server technology, but the Q4 2024 forecast flop saw the stock tank 21% to its lowest since January with margins under the cosh.
Even, the fact that its annual sales outlook far exceeded projections couldn’t save the day, such is the market’s mood right now.
Analysts said investors are watching for Super Micro margin improvement to demonstrate its ability to navigate the competitive tech hardware market in the AI era.
Super Micro also announced a 10-for-1 stock split that analysts say could moderate the stock’s volatility, and make the shares more easily accessible for millions of ordinary investors, the most likely reason to make that decision.
AIRBNB
It was an early check out for investors in Airbnb (ABNB:NASDAQ) this week as the shares fell 14% in after-hours trading on 6 August. The homes and rooms rental platform’s second-quarter earnings missing analyst expectations.
The company reported quarterly profit of $555 million compared to $650 million last year.
Although revenue increased 11% year-on-year, Airbnb issued a warning saying it’s seeing signs of slowing demand from US customers as they dial back on spending amid growing economic uncertainty.
The homes and rooms-rental platform expects third quarter revenue of between $3.67 and $3.73 billion, below analyst’ estimates of $3.84 billion, according to London Stock Exchange Group data.
Its key Nights and Experiences category, however performed well with 125.1 million bookings and there was growth across regions like Asia Pacific and Latin America.
It had also made progress with removing more than 200,000 low-quality listings.
Airbnb fell victim to shorter booking lead times on a global scale and slowing demand from US guests.
Over the past year Airbnb shares have dropped nearly 20% as investors have lost faith in the homes and rooms-rental platform amid changing travel trends – travellers simply booking traditional hotels or motels instead of Airbnb accommodation.
